Correlation Between Transport International and BRAEMAR HOTELS
Can any of the company-specific risk be diversified away by investing in both Transport International and BRAEMAR HOTELS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Transport International and BRAEMAR HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and BRAEMAR HOTELS RES, you can compare the effects of market volatilities on Transport International and BRAEMAR HOTELS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Transport International with a short position of BRAEMAR HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and BRAEMAR HOTELS.
Diversification Opportunities for Transport International and BRAEMAR HOTELS
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Transport and BRAEMAR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES and Transport International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Transport International Holdings are associated (or correlated) with BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of Transport International i.e., Transport International and BRAEMAR HOTELS go up and down completely randomly.
Pair Corralation between Transport International and BRAEMAR HOTELS
Assuming the 90 days horizon Transport International Holdings is expected to generate 1.06 times more return on investment than BRAEMAR HOTELS. However, Transport International is 1.06 times more volatile than BRAEMAR HOTELS RES. It trades about 0.07 of its potential returns per unit of risk. BRAEMAR HOTELS RES is currently generating about 0.01 per unit of risk. If you would invest 29.00 in Transport International Holdings on December 2, 2024 and sell it today you would earn a total of 66.00 from holding Transport International Holdings or generate 227.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. BRAEMAR HOTELS RES
Performance |
| Timeline |
| Transport International |
| BRAEMAR HOTELS RES |
Transport International and BRAEMAR HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and BRAEMAR HOTELS
The main advantage of trading using opposite Transport International and BRAEMAR HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International position performs unexpectedly, BRAEMAR HOTELS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BRAEMAR HOTELS will offset losses from the drop in BRAEMAR HOTELS's long position.The idea behind Transport International Holdings and BRAEMAR HOTELS RES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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